Is that message you just left your debtor going to get you sued?
The collection industry is not immune to the effects of evolving technology. Answering machines and cell phones have altered communication strategies for agents attempting to reach their debtors, and made the waters of debt collection murkier than ever.
Leaving collection messages may open collection agencies to liability. Because of this, some collectors are now unsure of how to get debtors to return their calls while remaining compliant with regulations.
A series of lawsuits and court determinations have provided collection industry experts with some guidelines on which collection message practices are unacceptable, which are questionable, and which are most favorable.
CAC webinar presenters June Coleman, Kelly Parsons-O’Brien, Shawn Suhr, and Courtney Reynaud discussed this topic during the first installment of their three part "Collection Boot camp" course series.
Below is a recap of the most common collection message practices they discussed during the class, along with good and bad aspects of each option and how to make the decision that's best for your agency.
Pure Call Back Message
"This message is for (Consumer's Name). This is (Collector's Name) with (Company Name) about an important business matter. Please call me back at 800-555-1234."
This message was reviewed during a lawsuit, and found to be inadequate because it did not include the required ‘mini-miranda’ stating the call was from a debt collector. To include the mini-miranda in future messages, while still avoiding possible disclosures of the debt to a third party, collectors soon moved to what is known as the ‘foti’ message.
Foti, named after a court case, Foti v. NCO Fin.Sys., Inc., 424 F. Supp. 2d 643 (S.D.N.Y. 2006), was thought to be the ideal solution for collectors. This message includes three parts, intended for maintaining debtor privacy while also including a mini-miranda.
During section one, the collector identifies who the message is for, leaves a call back number, and then asks the listener to hang up if they are not the individual named. This is done with the intention of preventing the disclosure of debt to a third party. After a six second pause, the message continues with part two.
This second section of the foti message tells the debtor to move to a private area and listen to the remainder of the message alone. This is another attempt at protecting private information from third parties.
After another six second pause, the mini-miranda is given, along with the callback number of the agency.
"This is a message for (Consumer's Name). If we have reached the wrong number for this person, please call us at (Wrong Number Toll-Free) to remove your phone number. If you are not (Consumer's Name), please hang up. If you are (Consumer's Name) please continue to listen to this message." 6 SECOND PAUSE "(Consumer's Name), you should not listen to this message so that other people can hear it as it contains personal and private information." 6 SECOND PAUSE "This is (Collector's Name) from (Company's Name). This is an attempt to collect a debt by a debt collector. Any information obtained will be used for that purpose. Please contact me about an important business matter at (Toll-Free Phone)."
While this may seem like the perfect solution to the pitfalls of 'pure callback,' Foti messages are also flawed. For one thing, if the message is left at an incorrect number, and the person who began the message does not hang up or destroy it, the message will be found in violation of the FDCPA disclosure liability rules. It bears mentioning that third party disclosure suits can also include damages for emotional distress, so a third party disclosure violation can become very costly.
Another issue with Foti is length. Including the mini-miranda is the main reason for leaving Foti rather than a pure callback message. However, it often gets cut off on voicemail or answering machines because of the mandatory privacy pauses.
These problems with Foti have led collectors to try a new option, the Zortman message.
The Zortman message makes no mention of who a debt collection call is intended for. Because Zortman avoids revealing private information, it has been ruled by some courts that a mini-miranda isn’t necessary, and may be an amicable solution to the problems with pure callback or Foti.
"We have an important message from (Company name). This is a call from a debt collector. Please call (Toll -Free Phone)."
However, Courtney Reynaud points out that “with the Zortman message, I don’t know who’s calling back.” She cautions that a third party might hear a Zortman message and return the call thinking it’s intended for them. To combat this, “collection representatives need to be trained so that they’re not disclosing information to third parties.”
And while some courts have agreed that Zortman does not require a mini-miranda, others argue it is too vague. Some courts believe that Zortman messages are not fully compliant, which may cause issues if your agency becomes involved in a lawsuit over your collection messages.
No Messages At All: An Agency Case Study
With so many conflicting ideas on what to leave in a debt collection message, some agencies are now experimenting with leaving no message at all. June Coleman confirms that if your agency decides to stop leaving messages, this is not a violation of the FDCPA.
But will it hurt your collection numbers? Reynaud conducted an internal case study of her own agency, Creditors Bureau USA, to find out.
Creditors Bureau USA still leaves Zortman messages for new accounts. However, as an account ages, it has become their policy to stop leaving messages for the debtor. Over a span of 230,000 phone calls, Reynaud’s agency experienced a 5.6 percent call return rate.
As you can see from the chart, 32 percent of those who called back did so using a number provided in a collection letter or collection message. However, the majority of those who called back (68 percent!), were those who called the phone number listed caller ID's.
Reynaud explains that call backs have increased with the number of consumers who own mobile phones. Not only this, but her findings prove that “consumers with cell phones are much more likely to return a call from a missed call than a voicemail message.”
For those interested in conducting their own internal case studies, Reynaud suggests setting up a separate 800 number from the one on your collection letters. Use this separate number as the one that will appear on the consumer’s caller ID. Separate numbers for returned calls is the easiest way to track whether calls are coming in due to messages and letters being sent, or because debtors are returning a missed call.
Leave a Message or Not?
So, is leaving a collection message the right move for your agency? Some agencies swear by Foti or Zortman. Some agencies have deemed messages an unnecessary hassle. Kelly Parson-O'Brien explains that since 2012, her agency’s policy has been to “only leave messages when we have permission to do so.”
Shawn Suhr, CEO of Continental Credit Control, Inc., explains his agency uses a combination of the three methods. “If we are returning a consumer’s phone call, we’ll typically use a Foti message,” said Suhr. “If we are making outbound artificial intelligent calls, we will leave no message on any recording device. However, if we get a party connect or a live party listening, we may play them a Zortman-type message to get them to call back.”
Ultimately, it’s up to you to decide which method is right for your agency. Before you choose, think about what your collection messages are trying to accomplish, what information you know about the debtor, and whether your practices could be leaving you open to litigation.
Download our Tip Sheet on Leaving Collection Messages, which outlines the pros and cons of each message option.